Compared to the average cost of Rs 1.35 crore a hectare during the last financial year, the acquisition value is estimated to be more than double this year, resulting in the overall cost of constructing a kilometer of a four-lane highway rising to almost Rs 16 crore, compared to Rs 11-12 crore a couple of years ago. A steep rise in the project cost has implications for the toll that users pay.

The overall cost for building a kilometer road includes the construction expenses as well as the compensation paid during land acquisition. Sources said the expenditure towards land acquisition for building bypasses could be even higher — as much as Rs 10-11 crore a hectare in certain pockets of the country — as land around urban clusters is more valuable. Also, bypasses need more land for construction compared to upgrading an existing two-lane stretch to four lanes. The higher cost of land also has implications for several greenfield expressways that were planned around the country.

Land was around 10% of the cost of constructing a four-lane highway in 2011-12, compared to almost 45% now. For instance, to build a kilometer of a four-lane highway, around 1.5 hectare is needed, which would have cost around 75 lakh in 2011-12. But now the cost of acquisition has increased to around Rs 4.50 crore for a kilometer, which is in addition to the construction cost. With government targeting to award at least 10,000 km over the next two-three years for their widening, there would be more acquisition.

But officials concede that thanks to higher compensation, landowners are more willing to offer land for acquisition. "The provisions of the new land acquisition law have become applicable for NH projects from January. Though our outgo is increasing significantly, there are positive indications that now there are fewer objections from owners as farmers are also getting greater financial benefit," said a government official.

But there are several areas on which the government wants the rules eased. For instance, the road transport and highways ministry has sought relaxations under the current law arguing that land acquisition for linear projects does not displace people in large numbers unlike projects for irrigation or setting up of power plants.

As a result, it has sought relief under Schedule-II of the new land acquisition law that deals with resettlement and rehabilitation of affected families. The ministry has put up a case that it should be allowed to make one-time payment to the affected families instead of annuity payments spread over decades. Further, it has sought exemption from Schedule-III of the law that requires the acquires to provide 25% additional services to affected families by building schools, health centres, roads and providing safe drinking water facilities, said a ministry official. These provisions are expected to push up the cost further.